Technology Diffusion: The Case of Internet Banking

22 Pages Posted: 24 Jul 2020

See all articles by Richard J. Sullivan

Richard J. Sullivan

Federal Reserve Bank of Kansas City

Zhu Wang

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2020

Abstract

Taking internet banking as an example, we study diffusion of cost-saving technological innovations. We show that the diffusion of internet banking follows an S-shaped logistic curve as it penetrates a log-logistic bank-size distribution. We test the theoretical hypothesis with an empirical study of internet banking diffusion among banks across fifty U.S. states. Using an instrument-variable approach, we estimate the positive effect of average bank size on internet banking diffusion. The empirical findings allow us to examine the technological, economic, and institutional factors governing the diffusion process and explain the variation in diffusion rates across geographic regions.

Keywords: Banking, Internet, Technology, Diffusion

Suggested Citation

Sullivan, Richard J. and Wang, Zhu, Technology Diffusion: The Case of Internet Banking (2020). Available at SSRN: https://ssrn.com/abstract=3659523 or http://dx.doi.org/10.21144/eq1060102

Richard J. Sullivan (Contact Author)

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States
(816) 881-2372 (Phone)

HOME PAGE: http://kansascityfed.org/home/subwebnav.cfm?level=3&theID=10970&SubWeb=10782

Zhu Wang

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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